How To Make Payday Loans Work for You Instead of Against You
Avoiding problems with payday loans in IllinoisBy Kevin Salzman | Last updated on January 12, 2023
Use these links to jump to different sections:payday lender out of necessity. How do you take advantage of the benefits of payday loans without falling deeper into debt and an even worse financial situation? Avoid these common pitfalls when using an Illinois payday lender:
Pay the Balance off as Soon as PossiblePayday loans are often advertised as a way to “bridge the gap” between pay periods. So long as a borrower only uses what he or she actually needs and pays the loan off when it is due or earlier, a payday loan may make practical sense. However, with some payday lenders charging $15 or more every two weeks per $100 borrowed, payday lending can quickly cause problems if the borrower renews it after the initial due date, or borrows more than he or she actually needs. A $250 payday loan, borrowed for two weeks, would result in approximately $37 in fees over the initial two-week period. If the loan is rolled over for another two-week period, that $250 loan has now cost the borrower $74 in fees. If the borrower did this for six months, that $250 loan will have cost the borrower nearly $450 in fees alone. Use payday loans for very short-term credit situations only, and you will avoid being consumed by the high fees these loans carry.
Borrow Only the Amount That You NeedPayday loans should only be used to get you through the immediate problem you are facing. If you need $100 for a doctor’s visit, for example, only borrow the $100. Borrowing more than the loan amount will result in additional fees, increasing the likelihood you will need to renew your payday loan at the end of the term. Payday loans can be a practical option for cash-strapped Illinois residents with unexpected expenses. Properly managing these short-term loans is key to making sure payday loans do not cause more financial problems than they solve. If you feel a payday lender hasn’t held up their part of the deal, consider reaching out to a consumer law attorney. For more information on this area of law, see our overviews of consumer law and debt collections.
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